2022 ANNUAL REPORT
2022
Annual Report
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EVALUATION OF 2022: STRATEGIES, DEVELOPMENTS AND FUTURE TARGETS

Ziraat Participation has determined its Strategic Roadmap for the period 2022-2025 as “Focused Growth”, “Sustainable Profitability”, “Competency Transformation” and “Exemplary Participation Banking”.

Ziraat Participation provided products, services and diversity of channels which are in compliance with participation banking principles in order to meet the financial needs of its customers through the correct channel, at the right time and with the appropriate value proposition. The Bank continued to be the strong solution partner of its customers with an ever increasing quality of service in corporate and retail banking business lines.

Ziraat Participation maintained its strong financial and operational performance in 2022, generating a profit of TL 3.8 billion.

Ziraat Participation is determined to continue to increase the support it provides in financing to the real sector and its contributions to economic growth in the future, in line with Turkey’s 2023 targets.

The Bank aims to expand and develop the interest-free finance system within the country and to represent our country abroad, with its branching efforts. In this direction, in 2022, it has launched 35 new branches in the country.

PRODUCT DEVELOPMENT AND MANAGEMENT

Ziraat Participation continues to increase its product diversity by meeting the needs and expectations of real and corporate customers from the most appropriate channel by offering the most appropriate solutions and value propositions.

Support Programs with KOSGEB

Support programs were signed between Small and Medium Enterprises Development Organization (KOSGEB) and Ziraat Participation with the purpose of encouraging production oriented investments.

Vegetable and Fruit Cold Chain Financial Leasing Support Program Protocol

Within the scope of KOSGEB Vegetable and Fruit Cold Chain Financial Leasing Support Program, with the objective of supporting a specific portion of the profit accrued in procurement of domestic goods and new cooling units and/or frigorific cases/units, “Vegetable and Fruit Cold Chain Financial Leasing Support Program Protocol” was signed and users are being supported.

Sustaining its strong financial and operational performance, Ziraat Participation had TL 3.8 billion profit in 2022.

KOSGEB Support Programs Financial Leasing Protocol

“KOSGEB Support Programs Financial Leasing Protocol” was signed with the objective of having KOSGEB support the advance payment and / or profit share of financial lease within the framework of the regulations of the related support program in the event of obtaining machinery-equipment, models and software which are determined to be within the scope of the KOSGEB support programs through financial leasing.

Bartın, Düzce, Karabük, Kastamonu, Sinop and Zonguldak Provinces and Ordu, Aybastı District Emergency Support Financing Protocol

“Bartın, Düzce, Karabük, Kastamonu, Sinop and Zonguldak Provinces and Ordu, Aybastı District Emergency Support Financing Protocol” was signed to provide financial support with favorable terms for businesses affected by the flood and landslide disaster occurred in Ordu province Aybastı district and in Western Black Sea region.

SME Financing Support Program with Employment Commitment (FOSTER)

“SME Financing Support Program with Employment Commitment (FOSTER)” took effect within the scope of “Strengthening Private Sector to Encourage Social and Economic Harmony in Turkey”. The program which is managed by the German Development Bank (“KfW”) is financed by European Union (EU).

With this program, KOSGEB will meet a portion of the profit share of the financing so that certain businesses can take advantage of using financing under favorable conditions. Businesses included in this program will be the ones which employ Turkish citizens and Syrians Under Temporary Protection (GKAS) or refugees from other countries in certain cities which are affected by immigration, operating in certain sectors, registered in KOSGEB database and active, those which are real people or under legal entity status in accordance with Turkish Commercial Code and in sectors supported by KOSGEB, with updated SME Information Declaration and those who are not banned from receiving KOSGEB Supports. 

SUPPORT PACKAGES WITH KGF

Support packages for pandemic conditions

Protocols between Credit Guarantee Fund (KGF) and Ziraat Participation were signed and offered to users within the scope of support packages to reduce the impacts of pandemic conditions on businesses and to support investments.

Investment Support Packages

KGF guaranteed “Investment Support Package” was prepared to meet financing needs of all SMEs and non-SME businesses which need guarantee support for their financing needs in favorable conditions for new or continuing investments to increase their production and employment capacities (primarily for companies operating in manufacturing industry or exporting companies).

Export Support Package

Within the framework of participation banking principles, KGF guaranteed “Export Support Package” was prepared to meet working capital financing needs of SMEs which are exporters or operating in sectors bringing foreign currency and those who do not currently export but have potentials for exports. These financing needs were met with favorable conditions to support SMEs.

Working Capital Support Package

For financing of working capital needs of SMEs and non-SME firms, “Working Capital Support Package” was prepared with the guarantee of KGF.

Import Substitution Against Production Support Package

Within the framework of Treasury Supported Guarantee System, “Import Substitution Against Manufacturing Support Package” guaranteed by KGF was continued to be offered to businesses with investment incentive certificates obtained for manufacturing industry investments to finance investments that will increase production and employment capacities by reducing the negative effects of the pandemic on manufacturing industry.

Ziraat Participation developed “My First House Housing Financing” and “Advanced Housing Financing” products to have its customers own houses at favorable financing conditions.

KGF Support Credit 2

“KGF Support Credit 2” protocol was signed between KGF and Ziraat Participation within the scope of the protocol related with equity warrants to support SMEs’ access to financing.

Tea Purchasing Support Package

“Tea Purchasing Support Package” was implemented and producers were supported to meet working capital needs of firms purchasing fresh tea from tea producers against producer receipts and companies purchasing fresh tea from Agricultural Credit Cooperatives.

Construction Services Financing Support Package

“Construction Services Financing Support Package” was implemented by Ziraat Participation with the support of KGF to help SMEs and non-SME businesses operating in the construction sector to complete unfinished housing projects and to keep housing supply without interruption in favorable conditions. Financing was provided to companies with houses that are at least 30% complete and companies which have at least 20% unsold houses or houses not yet promised to sell as of the date of application with the purpose of completing the projects.

ZİRAAT PARTICIPATION’S VALUE CREATING SOLUTIONS IN 2022 IN THE AREAS OF PRODUCT DEVELOPMENT AND MANAGEMENT

My First House Financing and Extended House Financing

Ziraat Participation developed My First House Financing and Extended House Financing products in order to provide its customers the opportunity to own a house at favorable financing terms,

Instant Financing

With “Instant financing” product implemented by Ziraat Participation in 2022, an opportunity was provided for its customers to finance their purchases from stores which have agreements with the Bank at any time of the day without going to the branch, through digital channels, easily and rapidly. Ziraat Participation customers can complete their financing process by using the QR code of the shopping basket at the contracted store and applying for financing through the Bank’s mobile application in accordance with interest-free banking principles and standards by approving all necessary documents via digital channels.

Residential Heat Insulation Credit

“Residential Heat Insulation Financing” product was implemented by Ziraat Participation for individual customers to finance heat insulation and roof insulation spendings in favorable terms to increase efficiency of energy, used to heat their homes, to reduce costs and carbon emissions within the framework of sustainability.

New Insurance Products

In 2022, Safe Personal Accident Insurance, Critical Illnesses Insurance and Cyber Security Business Insurance products were prepared and added to the insurance product range of Ziraat Participation to be offered to customers.

Findeks

“Findeks” product was implemented in 2022 which provides opportunity for real sector to know each other in financial terms, to increase their skills to take and manage risks, to support them to protect their capital and reputations, to help them gain competitive power by increasing their sales safely and to help individuals manage their risks properly and take their financial lives under control.

Agricultural Financing

Ziraat Participation continued to offer “Agricultural Financing” product in 2022. The Bank aims to provide financial support in line with participation principles in agricultural sector to develop agriculture, increase mechanization and agricultural areas, to strengthen livestock farming, to minimize imports in agriculture and maximize exports and to make efficient production possible.

Retiree Promotion Application

In accordance with a new protocol signed with SGK, within the scope of Ziraat Participation’s “Retiree Promotion Application”, retirees who are currently being paid or those who will be paid their pension salaries for the first time will be able to receive their salaries from the Bank.

Currency Protected TL Participation Account with Conversion to Physical Gold and Currency Protected My Home (Yuvam) account

Following the Currency Protected TL Participation Account and Currency Protected TL Participation Account with Conversion to Foreign Currency/Gold implemented in 2021, Ziraat Participation offered to its customers Currency Protected TL Participation Account with Conversion to Physical Gold and Currency Protected My Home (Yuvam) account.

Currency Protected TL Participation Account with Conversion to Physical Gold can be opened when domestic real person or legal entity customers deposit gold through contracted jewelers of refineries. Thus, additional return (provided by the Central Bank) calculated from the conversion of gold amount on an annual basis, based on its maturity in Turkish Lira in advance provided that it will not be withdrawn before maturity. Annual additional return provided by the Central Bank changes based on the maturity of the account.

My Home (Yuvam) account which is in Turkish Lira terms allows real person or legal entity customers residing outside the country to invest their foreign currency savings in USD, EUR, GBP and CHF at Ziraat Participation. In addition to currency protection the Central Bank provides, it also provides an advantage to earn additional return and protect their earnings in every condition.

E-Commerce Financing

E-commerce Financing is a product of Ziraat Participation which allows customers to obtain financing through digital approval rather than credit card or bank transfer when making purchases from online shopping platforms.

TOGG Financing

TOGG vehicle purchases will be financed in accordance with the vehicle financing partnership between TOGG and Ziraat Participation.

TLREFK-Indexed Leasing

This is a product which will allow for making leasing transactions indexed to TLREFK rate issued daily by Borsa Istanbul and Association of Turkish Participation Banks in accordance with interest-free financing principles. Thanks to TL based and variable cost leasing financing service offered with TLREFK-Indexed Leasing, indexing medium and long-term leasing financing service and financial cost to a certain series will be possible.

Mobile Letter of Guarantee

This product will make rapid approval of temporary electronic letters of guarantee within the scope of Public Tender Act through the mobile channel via the system without the need to visit a branch.

TARSİM Integration

Systemic integration process has started with Information Technologies teams for TARSİM integration and it is planned to be completed in 2023.

Mobile POS

With the Ziraat Participation Mobile POS product, customers can make collections through their Android devices by downloading Ziraat Participation POS application as of January 2023.

Commercial Credit Card

With Commercial Credit Card product, the Bank will provide its customers operating in commercial life with the opportunity to use credit cards in line with participation banking principles to meet their financing needs at all sectors where credit cards can be used.

TROY card

To increase the use of domestic and national brand TROY in payments with card, the Bank will start to issue TROY cards and offer it to customers.

CORPORATE BRANCH BANKING

Ziraat Participation Corporate Branch Banking continued its support to customers in 2022 with advisory services it provides to public and private sector organizations. The Bank provided tailored solutions for each customer and strengthened its relations with its experienced team.

Ziraat Participation Corporate Branch Banking monitored the changes in the world and economic conjuncture in 2022 and supported its customers by offering products to meet their needs.

Taking sector and hinterland distribution into consideration, Southern Anatolia Corporate Branch was opened in Gaziantep with the purpose of reaching the correct customer at the correct location.

COMMERCIAL BRANCH BANKING

In line with providing services to customers through proper channels, Ziraat Participation gave speed to customer and branch segmentation activities within the framework of customer-oriented banking approach during the first quarter of 2022, segmentation rules were defined and segment assignment of customers were made. Within the scope of this project, Commercial Segment was established in addition to current segments based on customer structure and accordingly, Commercial Branch Banking Directorate started its operations. Through Ziraat Participation commercial branches, services will be provided to customers in commercial banking segment and customers who are in corporate banking segment at cities where there are no corporate branches.

Accordingly, in 2022, 14 commercial branches were opened in 9 different cities which are within the management area of Commercial Branch Banking Directorate.

PRIVATE BANKING

Private Banking Department Directorate started its operations on 17 January 2022 to manage all financial needs and savings of both domestic and foreign wealthy customers who are at top segment and wish to receive different services than current banking services in line with rules and principles of participation banking, to support rapid implementation of investments and to share solution ideas.

Strengthening its customer-oriented strategy with Private Banking Department, Ziraat Participation differentiated its private banking customers in its new segment structure.

Value creating solutions of Ziraat Participation in private banking in 2022

With a solution-oriented approach, the Bank offers value creating solutions based on private banking customers’ needs, develops its products, services and channels continuously following the technology closely.

In this respect, Private Banking section of the corporate web site of Ziraat Participation has been activated in 3 languages

At the Private Banking Center, customer acquisition and services provided are available in 5 languages, English, Arabic, Russian, Kazakh and French.

For effective communication a WhatsApp online support line +90 530 917 41 14 was established particularly for Private Banking customers.

Credit card contracts were prepared for opening accounts in Arabic and English. My Home Account and Currency Protected Account contracts are translated to Arabic and English.

Vaad and Forward products are designed based on Private Banking customers’ needs.

Various activities were conducted at domestic and international platforms to promote private banking services:

In the normal course of business, foreign customers coming to Turkey are required to obtain a Tax Identity Number using Interactive Tax Office. However, our Bank has become the first and only bank that can obtain potential Tax Identity Number for foreign customers before coming to Turkey, thanks to our collaborations with other parties. Thus, processes of private banking customers became faster for real people residing outside the country to invest their savings in USD, EUR, GBP and CHF at Ziraat Participation.

In addition to financial management, agreements have been made with numerous institutions to provide concierge and assistance services to private banking customers. These services include the following:

Furthermore, TAV Passport Card and IGA Pass Extra Card with Ziraat Participation privileges are given to all private banking customers as present and privileged services are provided at contracted airports with those cards.

Our legal and financial advisory services are also expanded to different countries based on the needs of our Private Banking customers.

Corners (Private Banking Portfolio Points) at designated areas of branches are designed based on customers’ comfort and privacy. Currently, Private Banking Corner areas started operating at Fatih, Eminönü, Suburcu Gaziantep, Yalova/Bursa and Beykent branches.

Private banking in the following period…

Ziraat Participation continued to develop new products and services in alternative distribution channels in 2022.

DIGITAL BANKING AND CHANNEL MANAGEMENT

Ziraat Participation provides its services through alternative channels in a wide range of transactions and service variety based on tendencies of its customers’ profiles.

The Bank continued to develop new products and services in 2022 at alternative channels which provide great benefits to reach large number of customers.

Ziraat Participation’s value creating solutions at alternative distribution channels

Central Banking Branch in 2022

As a result of these activities;

Alternative distribution channels in the following period…

In 2022, Ziraat Participation increased its asset size by more than twice and followed a strategy to finance primarily real sector and foreign trade.

TREASURY MANAGEMENT AND INTERNATIONAL BANKING

In 2022, Ziraat Participation increased its asset size by more than twice and followed a strategy to finance primarily real sector and foreign trade.

Value creating solutions of Ziraat Participation in the area of treasury management in 2022

In asset-liability management, Ziraat Participation went to resource diversification participation funds being the main source; established the liability side of the balance sheet observing optimal cost and maturity and adopted a strategy of most efficient management of the pools from participation funds. In this context, the bank expanded its resource opportunities in Turkish Lira and foreign currency from domestic and international banks in 2022.

Additionally, in 2022, by obtaining SME support credits through Islamic Development Bank from international markets and subordinated loans from domestic sources, Ziraat Participation both kept resource diversification and strengthened its funding structure.

Ziraat Participation achieved a great contribution to increase its profitability figures by effectively managing its sukuk portfolio. Considering the inflation increase, CPI indexed lease certificates obtained made up a large percentage of increase in securities profit share amount.

Securities were purchased from issuances made during the periods when profit share rates were high based on the Bank’s expectations and included in the fixed-return lease certificate portfolio. Thus, Ziraat Participation’s profitability numbers were affected positively.

By creating proactive solutions and taking necessary actions Ziraat Participation successfully achieved ratios defined by the authorities in 2022 within the scope of macro-prudential measures.

Ziraat Participation used intra-bank borrowing and financing instruments effectively to meet the required reserve liability, to meet the liquidity requirements based on participation banking principles and to utilize the surplus.

Ziraat Participation received four different lease certificate issuance ceiling from the Capital Markets Board, two for TL 15 billion, one for TL 12 billion an done for TL 1 billion.

Ziraat Participation’s value creating solutions in international banking in 2022

In 2022, Ziraat Participation established SWIFT correspondent relations with many banks by completing regulatory compliance process and responded to the demands in foreign trade area rapidly. In 2022, the Bank reached 53 different correspondent account in 19 different currencies and signed wakala/murabaha agreements with various banks.

Ziraat Participation plays an active role in the capital markets as a part of its strategy to enrich the resource structure. The Bank obtained issuance approval to issue four TL denominated lease certificates, one with a ceiling of TL 12 billion, two with a ceiling of TL 15 billion and one with a ceiling of TL 1 billion, from the Capital Markets Board in the local market with its affiliates, Ziraat Participation Varlık Kiralama and ZKB Varlık Kiralama. Within this framework, lease certificate issuances were made with a total of nearly TL 16.1 billion.

In 2022, Ziraat Participation continued to provide long term resources from the Islamic Development Bank and various other development banks, for financing SMEs and foreign trade financing and to maintain its financing support for SMEs and the real sector. In this context, a financing agreement was signed with Islamic Development Bank at EUR 92 million to be extended to SMEs and medium scaled commercial customers and extension process started.

Customer acquisition and retention activities continued at the Bank’s first foreign branch, Sudan branch, and the Bank supported the activities to increase foreign trade volume between Turkey and Sudan.

International banking in the following period…

Ziraat Participation aims to complete the following steps in 2023:

Foreign Branch Banking

Ziraat Participation is shaping its Foreign Banking activities in accordance with its international banking strategy and vision.

In this context, the Bank conducts its Foreign Banking activities successfully with the following objectives:

FINANCIAL MANAGEMENT

Periodic reports for public institutions, primarily BRSA, TCMB, TMSF, TKBB and Ministry of Finance Public Treasury Data Management System and information and documents requested by these organizations and institutions are sent on a timely basis.

Compliance with TCMB’s Required Reserve and Security Establishment was achieved accurately and on time. Coordination was set up by the Bank to manage this process in a healthy manner.

Within the scope of budgeting and analytical balance sheet studies, web-based Management Reporting System was strengthened with the new reports developed in 2022.

With the newly designed Legal Reporting project aiming to obtain fast, flexible and accurate data, the Bank’s daily balance sheet and related financial data can be obtained from the system in minimum time. Thus, time and employee efficiency increased significantly in financial data analysis and legal/ internal reporting processes.

Within the scope of budgeting and analytical balance sheet studies, the Bank started to work on instant monitoring of all asset returns and liability costs with system automation and this project is planned to be implemented in the first quarter of 2023.

CREDIT AND FOREIGN TRADE OPERATIONS

FOREIGN TRADE TRANSACTIONS:

Ziraat Participation’s value creating solutions in foreign trade transactions in 2022

Foreign trade transactions in the following period…

GUARANTEE TRANSACTIONS:

Ziraat Participation’s value creating solutions in guarantee transactions in 2022

Guarantee transactions in the following period…

Ziraat Participation aims to implement the following significant projects within the scope of guarantee transaction activities in 2023:

Ziraat Participation aims to implement significant projects within the scope of fund extension transactions in 2023.

FUND EXTENSION AND PROCESS TRANSACTIONS:

Ziraat Participation’s value creating solutions in fund extension and process transactions in 2022

Fund extension and process transactions in the following period…

Ziraat Participation aims to implement the following important projects in fund extension transactions in 2023:

SPECIALIZED TRANSACTIONS SERVICE:

Ziraat Participation’s value creating solutions in specialized transactions area in 2022

Specialized transactions in the following period…

Ziraat Participation aims to implement the following important projects in specialized transactions in 2023:

FINANCIAL LEASING OPERATIONS:

Financial leasing operations transactions in the following period…

Ziraat Participation aims to implement the following listed important projects within the scope of financial leasing operations in 2023:

Ziraat Participation continued its activities in Information Technologies intensely in 2022.

INFORMATION TECHNOLOGIES

Ziraat Participation aims to increase its efficiency, quality and speed by improving customer experience in the field of Information Technologies. The Bank has achieved significant progress by integrating the innovation and change management required by the times into its systems and processes by conducting its activities in information technologies intensely in 2022.

Ziraat Participation’s value creating solutions in information technologies area in 2022

Information technologies area in the following period…